U.K. sales at stores open at least a year rose 1.8 percent
in the six weeks ended Jan. 5, excluding gasoline and value-added taxes, the Cheshunt, England-based grocer said today. That
was only the second quarter of growth in eight and beat the 1
percent median estimate of 10 analysts compiled by Bloomberg.

The sales, while flattered by comparison with what the
grocer described as “disappointing” sales a year ago, provide
an indication that Chief Executive Officer Philip Clarke’s
efforts to regain customers are paying off. Clarke has been
overseeing the domestic business since March when the failed Big
Price Drop campaign led the grocer to cut profit guidance for
the first time in 20 years. Tesco said today that U.K. Chief
Operating Officer Chris Bush will take over the role.

“The U.K. recovery is well on track,” James Collins, an
analyst at Deutsche Bank AG in London, said in a note. “The
improvement is broad-based, with all regions and all formats
showing positive like-for-likes, driven by the food business.”

Tesco rose as much as 3.2 percent in London trading and was
up 2.4 percent at 357.4 pence as of 10:05 a.m. The stock has
gained 6.4 percent this year after falling 17 percent in 2012.

“We were back on form,” Clarke told reporters on a
conference call today. “Our stores performed well, every format
made a contribution to that like-for-like growth.” Online sales
advanced 18 percent, the company said.

Brighter Stores

The CEO said Tesco’s investment in own-label products “is
starting to pay off.” The 1 billion-pound ($1.6 billion) Value
range was relabelled under the Everyday Value banner last year.

Tesco’s share of U.K. grocery spending fell to 30.5 percent
in the 12 weeks ended Dec. 23 from 30.6 percent a year earlier,
Kantar Worldpanel said this week, the 0.1 percentage point drop
being an improvement on an average 0.4 point decline for 2012.

Management Changes

The task of maintaining Tesco’s U.K. recovery will now pass
to Bush, a 30-year company veteran who was brought back to the
U.K. last year, having led Tesco’s Thai business since 2010.

Bush will join the retailer’s executive committee which
oversees group strategy, along with Tesco Bank chief Benny
Higgins, and Jill Easterbrook, who leads Tesco Ireland and the
mobile-phone unit. European CEO Gordon Fryett will retire in
November and be replaced by Ken Towle, the internet retailing
director. Tesco also said Robin Terrell will join from the House
of Fraser department-store chain as multichannel director.

The company’s full-year outlook in the U.K. is unchanged,
Clarke said, describing the future as “somewhat uncertain.” He
declined to speculate on whether Tesco will continue to post
same-store sales growth in its domestic market, where it still
gets about two-thirds of revenue.

The retailer said its businesses in Asia and Europe had a
“similar performance” to the previous quarter.

Six-week revenue in Asia rose 7.6 percent at constant
exchange-rates as stronger sales in Thailand offset regulatory
restrictions on Sunday trading in South Korea. Revenue in Europe
declined 0.6 percent on the same basis.

In the U.S., which Tesco has said it expects to exit after
announcing a review of its Fresh & Easy chain, sales increased
4.1 percent from a year earlier, the company said.